Dow Technicals Flip-Flopped On Yesterday’s Mammoth Rally

Tuesday, November 8, 2016 5:33

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Technically, the market was down for 9 straight sessions and becoming oversold, so a bounce yesterday was to be expected. Pundits proclaimed it the Hillary Rally, as FBI chief said they no longer were investigating her for her emails.

The Market gapped to the upside and moved up through the morning hours. The afternoon brought sideways trade till the final minutes when a last minute bump pushed the averages near their highs of the day. All three major indices ended with significant gains on the day. At the close, the DJIA was up 2%, the SPX gained 2.2%, and the NDX added 2.4%.

Breadth was decidedly positive, 5 to 1, on average volume. 10-Day Rate of Change (ROC(10)’s) advanced with the DJIA crossing back into positive territory, while the NDX and SPX remained in negative territory. Relative Strength Indicators (RSI’s) spiked to the upside, with the DJIA and SPX moving into the 50’s and the NDX finishing at 46.9. All three major indices remain with their Moving Average Convergence Divergence (MACD) below signal. The ARMS index, which measures volume of advancers and decliners, ended the day at 0.43, a very bullish close.

As mentioned previously, after 9 days to the downside, the averages got the day and week off to a good start, gapping to the upside. All three major indices developed large ‘Bullish’ candlesticks in the session. Both the NDX and DJIA moved back to a positive near term bias. The DJIA moved through its 20D-SMA(18120) and 50D-SMA(18218), ending at 18259. The NDX moved back above 4760(a near term pivot point), but remains below its 20D-SMA(4806) and its 50D-SMA(4815).

The SPX, which last week tested its 200D-SMA(2083), moved back above some key resistance levels, and closed above its 20D-SMA(2128). It also moved back above the 50% retrace level of 2095, reversing short term bias to the upside.

The VIX fell 16.8% to 18.71. Near term support for the NDX is at 4760 and 4725. Near term resistance is at 4775 and 4806. Near term support for the SPX is at 2125 and 2114. Near term resistance is at 2134 and 2147.

Europe is mixed in early trade this morning, with US Futures slightly lower in the pre-market. We’ll be looking for some follow-through on yesterday’s big rally today on this historic Election Day.

Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, David Chojnacki, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Dave Chojnacki

Dave Chojnacki is the Chief Market Technician at Street One Financial. He provides technical support for the Street One team and also develops individual analysis for Clients as requested.

Dave is a major contributor to the ‘ETF Daily’, a morning newsletter providing clients a daily look at market technicals of the major indices and selected ETF’s. Market trends, support and resistance levels are provided in the daily letter. The Technical portion of the daily can also be found on Seeking Alpha. Mr. Chojnacki has been quoted in a number of industry publications including the Reuters, ETF Trends, Minyanville, Yahoo Financial and Investors.Com.

In addition, Dave assists with desk trading when necessary. He possesses a Series 7 and 63.

Prior to joining Street One, Dave designed and developed I/T Systems for the Insurance and Financial Industries./div>

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